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From: vincent64 on 8 May 2010 20:39
Nobody will ever know the exact cause of this historic collapse (the
largest intraday drop ever) followed by a recovery within a few
minutes. It impacted several stock exchanges and most stocks, and the
volume was heavy.

Possible causes:

Is it a terrorist plot? No, terrorists don't have this level of
sophistication. Even if the terrorist was a trader in a major US bank.

Is it manipulation by the government to extract hundreds of billions
of dollars to finance health care, the Greeks and other problems? I
don't believe in this conspiracy theory, because the government also
lacks the required level of sophistication.

Wall Street crooks? I don't think so. Did money really change hands?
Maybe for a few minutes, but it's not like 500 billion dollars were
"stolen" from ordinary investors and permanently transferred to a few
large accounts. It's likely that the money came back to those who lost
it (see my section on "probable cause" to understand why it came
back).

Trading error? No trading error could produce such a drop.

Probable cause:

The stock market is driven by emotions. Behavioral analytic models
explain swings and volatility. If you've been ....

Full story at http://www.analyticbridge.com/group/computationalfinance/forum/topics/dow-losing-600-points-in-a-few
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